FCC Set-Top Box Proposal is Not Consumer-Focused

FCC Chairman Wheeler has endorsed a proposal, generally referred to as AllVid, to allow third parties to sell subscriptions to television viewing through devices other than the set-top boxes rented from the cable or satelite companies.   While that may sound good for consumers and competition—and the chairman has certainly made a lot of noise about the amount we supposedly spend each year for set-top box rental—there are some very serious flaws with the proposal as it stands.  Not surprisingly, the makers of third-party devices, including Google, Radio Shack, and Sony, are endorsing the proposal, and many tech pundits have described the proposal as pro-consumer and pro-competition; but what’s on the table is drastically short sighted.

1)  Killing Off the Programming You Wanted in the First Place

As the deal stands, the third-party box-makers would be able to provide their subscribers with TV programming that these companies have not licensed.  As such, if the deal goes through, consumers could easily find themselves with more access to a lot less programming over time.  The licensing agreements, which allow traditional cable and satellite providers to distribute the programming, are the financial foundation that enables investment in TV production, including the health and pension plans for just about every member of the crew.

Many people recognize that we are experiencing a Golden Age of small-screen viewing, with production values unlike anything television provided 15-20 years ago.  Consumers have come to expect their favorite shows to reflect some of the best creative and technical work the industry has to offer, but that work costs money.  Meanwhile, most hit shows already face enough drain from outright piracy without the FCC allowing a company like Google to “legally” make TV available without having to license it.  Moreover, as The Walking Dead producer Gale Ann Hurd wrote in an OpEd for USA Today, this proposal can foster a kind of “channel surfing” between legal and illegal platforms.

“It would also allow Google — and for that matter set-top box manufacturers from all over the world, including China (where rogue boxes are being built by the millions) — to create and market applications or boxes with software that will treat legitimate and stolen material exactly the same, and could in many cases help steer consumers to piracy.”

This proposal is short-sighted in a way that is typical of our times—based on an assumption that no matter how many ways we develop to acquire free or cheaper access, the material we want will just magically be there. This is like buying really fancy kitchen fawcet while allowing the manufacturer to poison your well.

2)  RememDCA Graphic AllVidber the TV’s in 1984?
In Orwell’s novel, the TV’s watch us, right?  According to Digital Citizens Alliance, the FCC proposal does nothing to protect consumer privacy—either from Google’s stated mission to “know us” through increased data-mining, or from hackers who can turn our smart TVs into eyes and ears inside the home.  DCA’s infographic indicates that Americans are uncomfortable with Google’s increasingly watchful presence through many devices and that consumers still consider TV viewing a different experience from computer use, web browsing, etc.   For instance, parents are apt to maintain some vigilance with regard to their kids’ use of the web—or at least they should be—but allowing one’s nine-year-old to watch a TV show is supposed to be a one-way transaction.

3)  More Degradation to the Advertising Ecosystem

Digital Citizens Alliance points to the very real possibility that Google could use a viewer’s internet browsing habits to determine (via algorithm) which ads to serve along with a particular TV program.  Not only is this potentially invasive for the consumer, but it could also severely degrade the overall advertising market, which already sees considerable waste in the online ecosystem.

Presently, there is still value in a targeted media buy of 30 seconds during a hit TV show.  But under the AllVid proposal, if Google in particular is able to siphon off some portion of viewers without paying for the material, they are not only diluting the value of the network’s property but are also converting some portion of the high-value ad market into a lower-value ad market because of the opaque and diffuse manner in which online advertising exchanges work.  This could ultimately lead to Google owning far too much of the advertising market that has been traditionally driven by television programming—without the company having to invest in, or license, a single program. Sounds like SOP Google to me.

4)  A Solution Looking for a Problem

As the organization CALInnovates points out in its petiition against the FCC AllVid proposal, Chairman Wheeler is pushing for a “solution” that does not solve a consumer problem so much as it simply creates a market for the manufacturers of third-party boxes.  Meanwhile, not only are we seeing a Golden Age in quality TV content, but we’re also enjoying a technological Golden Age with increased flexibility for TV viewing via multiple platforms on just about any device through both free and subscription-based services. In fact, as Larry Downes describes in The Washington Post, the tangible TV future is already well ahead of the FCC. “On Capitol Hill last week, Republican and Democratic staffers expressed confusion over the FCC’s sudden urgency in solving a problem that seems to be going away in spite of previous efforts by the agency to enforce video standards, all of which failed,” writes Downes.

Downes also quotes Roku founder Anthony Wood (a presumptive beneficiary of the AllVid policy) who says, “The proposal isn’t actually intended to help consumers, but is rather a Trojan Horse urged by Google and others to give them free access to licensed content from major studios without having to negotiate for rights.”

The market will continue to innovate, building new flexibility as long as innovation is based on licensing and contractual agreements with producers.  CALInnovates insists the AllVid proposal will actually harm the competitive market, which will ultimately harm consumers.  It is the FCC’s job to put consumers first, to protect their privacy and security and foster a diverse competitive market. Despite the rhetoric, it is very clear why this proposal would be good for Google and other manufacturers who see an opportunity to capitalize on investments they themselves have not made.  It is no way clear how this proposal truly benefits the viewing public.

© 2016, David Newhoff. All rights reserved.

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